CFOs Who Partner with an Outstanding Retirement Plan Advisor Achieve Financial Benefits for the Business

An aging workforce given adequate health and welfare benefits but inadequate retirement benefits spells trouble for an organization’s financials, something every CFO needs to know. There are financial benefits to be gained by CFOs who join the plan committee and leverage the retirement plan to put employees on a path to retirement success.

The report on a survey of 401 plan sponsors demonstrates that changing the allocation of the benefits budget from healthcare to retirement counteracts adverse self-selection in recruiting and employee retention. Partnering with an outstanding retirement plan advisor to create a well-designed retirement benefits program obviates the need for onerous and ineffective early retirement programs. Smart plan design improvements such as implementing automatic enrollment at a high default contribution level and instituting annual automatic deferral increases of at least 1% soon boost employees to the desired minimum of 10% of salary going into the plan each year. CFO participation on the retirement plan committee assures that these measures are carried through.

CFOs who continue to monitor the retirement readiness of both their plan and their employee population serve business and employee interests equally well, creating a win-win for their organization.

Plan sponsors who retain the services of a Professional Retirement Plan Advisor entirely dedicated to the business reap tremendous benefits from the partnership. Most salient is the enhanced participant retirement readiness that stems from repeated measurements, participant reporting, plan design changes, participant guidance, and advice. Specialized Advisors apply a wealth of insight and experience to create an environment conducive to participation and contribution levels that lead to retirement success.

This discovery research study was conducted by EACH Enterprise, a firm specialized in retirement plan research whose clients include retirement plan service providers and investment managers across markets, plan sizes, distribution channels, and asset classes.

EACH Enterprise administered the questionnaire to 407 plan sponsors screened from among a panel of 3,307 plan sponsors. The sample consists of:

Employers of the private sector (privately-held, exchange-traded, and not-for-profit)

100 employees or larger

401(k) or 403(b) plan sponsors

Plan assets in the $5 million to $500 million range

Head of the retirement plan committee or fiduciary named in the plan document

What Type of Professional Retirement Plan Advisor is Right for My Plan?

Most plan sponsors who partner with a specialized Advisor follow a deliberate selection process before hiring their Advisor. This report offers guidance for plan sponsors interested in hiring a specialized Advisor, and helps them understand the different types of Plan Advisors. Findings are based on focus group discussions with plan sponsors who partner with a Professional Retirement Plan Advisor of some kind.

The study shows plan sponsors increasingly turning to formal RFP searches to find the correct Retirement Plan Advisor for their plan. Plan sponsors in the study ascribe many benefits to conducting a formal RFP search for a plan Advisor. Compared to other approaches, a formal search process

is inherently fair,

demonstrates the plan sponsor acts responsibly in the exercise of fiduciary duty,

aligns plan goals with the services and business model of the selected plan Advisor, and

The Professional Retirement Plan Advisor

This survey of 409 employer offering a 401(k) or a 403(b) plan completed in September 2011 found that sponsors who partner with a Professional Retirement Plan Advisor enjoy superior retirement outcomes for their participants, superior understanding of fiduciary issues, improved plan designs, improved plan arrays, improved overall asset allocation among plan participants, more reasonable fees, and greater confidence in plan compliance and investment options.